Locals in Hong Kong Don’t Want to Be Seen as Hong Kong Companies

Michael MicheliniBlog, Business, Case Studies0 Comments

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This blog is focused on the English-speaking Western readers, but I do interact with Hong Kong locals and Mainland Chinese on a regular basis on similar topics. One topic that I am interested to share is that of the many who don’t want to be known (branded) as a Hong Kong company or a Chinese company – as it is seen as negative to the Western world. Well, I can’t say only locals feel this way; I have met quite a few Westerners who also don’t want their corporate image to be connected to China or Asia. So let’s dig into why.

Everyone Always Wants What They Don’t Have

My mom would always tell me, “The grass is always greener on the other side,” when I wanted something so badly, and I think that is the case in these situations too. I remember when I first came to China at the end of 2007 and was trying to get started doing China business, my new Chinese business friends were all eager to learn from me about Western business. And while they were interested in learning Western business, they were discouraging me from venturing into Chinese business. They said that it is not a level and fair playing field in China and I’d have no chance. They also said I’m lucky I am a Westerner; their only chance at making their fortune is to get foreign (non-Chinese) customers. And that I should take advantage of being a Westerner and continue to focus and grow my international business.

And then I continually meet Westerners looking to strike it rich in big, bad China. The song “Blinded by the Light” comes to mind. The news in the West is all about the massive market potential and the Alibaba phenomena. Maybe my Chinese business friends have always been right and international business (i.e. anything outside of China) is really the way to have a level playing field.

On my Facebook feed I keep seeing Chinese so excited to share their progress in getting a green card in the USA. And in that same feed, I see Westerners so excited to be visiting or relocating to China. It is quite funny actually. Maybe that is what Facebook is optimizing in my news feed, and also the core of my friends – #crossbordercrew.

But in any regard, I believe for the most part Westerners want to be Chinese, and Chinese want to be Westerners. Or maybe just those I am surrounded with on a day-to-day basis.

Westerners that Want to Be Chinese

At least a couple times a week someone asks me how they can “conquer” the Chinese market. They are just getting started but they have read the news and kept up with the changes in policies over the years. The news in the USA keeps talking about the size of the Chinese market and the Alibaba IPO, which makes things seem unstoppable.

I get really excited when I feel the energy in their voice or email. It spreads through me and makes me think of the days I was first in China.

They also are new like I was and feel that a Hong Kong company, or doing business in Hong Kong in general, is an extra layer of cost and a middleman to doing business in China. This is something that is hard for me to convince in one email or one sitting – but I have been saying Hong Kong is your best friend when doing business in China as it has the best of both worlds.

Chinese Want to Be Westerners

In Hong Kong, there are tons of locals who can’t wait to get a chance to move to Silicon Valley or other parts of America because of what they have seen on the news about openness and innovation, as well as more open-minded early-stage investors to support their ideas and dreams. And not just in Hong Kong, but also Mainland China – many of the staff that have worked with me over the years dream of the chance to visit and ultimately relocate to the United States of America.

Many of these Hong Kong and Mainland people are the youth, and many say that the system they live in “isn’t fair and equal” and that it is much harder for them to do business and succeed where they are than to go to America. It makes me appreciate being American and having the opportunities to learn and build the way I did growing up.

Is Hong Kong Still Seen as China?

With the Occupy Central protests last year, maybe the world is separating its view of Hong Kong as being the same as China? Or are people actually even reading the news? But a lot of my Hong Kong business friends are still afraid to be associated with Hong Kong on their public marketing materials because they believe the majority of the global population would see it as a Chinese entity and be wary of signing up with their personal information on the website or mobile app as it may be on a Chinese server and accessed/spied on by the government, even though the Hong Kong companies use the typical Amazon cloud US server accounts like any other Western business. The world is flat; people don’t realize that it isn’t where the business is physically located or registered, but where the hosting account (server) is that really matters.

In any regard, I wonder if Occupy Central has changed the thinking of the majority of the population: a Hong Kong company is not the same as a Chinese company. And with the Edward Snowden leak, do people still trust data that is hosted on US servers as much anymore either?

But I do need to realize I am not the typical consumer and internet surfer, so I am left to wonder if an American sitting at the computer in the suburbs in middle America hesitates to sign up for an app or buy a product if they can see it is a Hong Kong company? And if so, would they feel any differently if it had a Hong Kong address versus a China address? I do have to admit, before I was exposed to international business, I considered Hong Kong and China the same. I have a feeling the majority of people in America still think that way.

If I’m Seen as in China, People Will Assume My Prices Should Be Cheaper

Another story is that when I was dealing with China sourcing, people who would deal with China assumed everything has to be cheaper. Sure, that is the basic concept of outsourcing your manufacturing or staffing – for the cost savings. But just doing something because it is cheaper is a dangerous path.

I have friends who have done IT development, and they are based in China but put a New York address on their website. The clients accept the “normal” rates for technical development, and then when or if they learn he is based in China, they start to ask why prices can’t be cheaper. Or going forward they will pressure him to lower prices because he is based in China. I still remember clearly how upset he gets about clients wanting a cheaper price just based on where he was living.

As the global economy develops, “cheaper” places are increasing in price, and “developed” economies are decreasing in price. It will all be about the same in the near future.

Or Seen as a Cheaper Clone of a Western Business

What if this Hong Kong or Chinese company has innovated a new idea? Would that be seen as a possibility? Or will one simply assume this is a cheaper knock-off of a Silicon Valley startup? I think times are changing; maybe it will just take time to settle, but companies from all around the world can innovate – the flow of information has gone global, and location is becoming less and less important. But this stigma of copy to China or Asia is still somewhat true and is damaging other legitimate businesses trying to build something innovative and new. Pioneers always take the biggest risks, but can also reap the biggest rewards.

For Chinese Tech Companies Going Overseas, China Brand Is Toxic

This Tech in Asia article sticks in my mind – for Chinese companies going overseas, China brand is toxic – and this doesn’t help the matter too much. The consumer is going to have to get more educated, especially those using social media sites (but then again, isn’t that everyone). Where is your data hosted? When you upload your status update and your photo from the party last night, where is that image going? On a US server, on a Chinese server, Russia? The toxic part of the Chinese internet brand is that the Chinese government makes the Chinese internet companies filter what is said on social media. And when those internet companies go overseas, it seems the government policies are following as Tech in Asia reports that in non-Chinese regions posts are being deleted by WeChat that contain “sensitive” information.

This is why the company I’ve recently partnered with, Unchained Apps, doesn’t want to be associated with being Chinese – as the company fears users will not want to sign up for our various apps. But keep in mind, none of our data is hosted in China, we use Amazon AWS just like an American company does. And Hong Kong companies are different from China-based companies, they do not need to host in China. Honestly, I know a lot of Chinese-registered companies that use overseas hosting (USA, EU) for their businesses as that is the market they are targeting; they simply pay for the hosting with their credit card (GoDaddy even accepts AliPay!).

I am curious why or how these Chinese tech companies have to allow the government to filter content that is in overseas markets. Is it because it is hosted in China even though the users are in other countries? Wouldn’t the site speed be slower? Wouldn’t these Chinese tech companies have servers in those local markets? So if say, Tencent WeChat has US-based users, and they have their servers in the USA, do both the US government and the Chinese government have access to this information? And then, does the Chinese government force Tencent to delete posts they do not like? This is fascinating to me, but of course doesn’t make me happy.

What makes me really sad, as an open information kind of person, is that I think the internet will continue to build up these virtual borders, which goes against exactly what the internet was all about: the free flow of knowledge, information, and new friends around the world.

Maybe It Depends on the Industry

As the Tech in Asia article mentions, they say “Chinese tech” companies. But there are definitely groups of people who refuse to buy anything Made in China. Yet, overall globally it is accepted that most products are manufactured in China. There are not even other choices at this point, so much infrastructure has been built up over the years. And everyone in the world wants to target and sell to the up and coming middle class in China.

Do Chinese Tech Companies Like to Filter Content?

But for a technology company in China, going outside of China is definitely an uphill battle. I remember when I did a tour of Baidu’s headquarters in Beijing, the tour guide told us that Chinese tech companies don’t like to filter their data, and while Google can just refuse to do it and leave the country, for a Chinese tech company if they don’t filter, they will be shut down. So these tech companies say they do it in order to stay in existence, and hope that one day they will be allowed to be more free. It is a large cost to filter all their user content, it is labor intensive and they have to hire a lot of people to manually monitor and search for data that isn’t allowed to be on the Chinese internet.

I know people, Chinese tech gurus, who had their websites shut down for various reasons – sometimes justified, and sometimes unjustified.

Maybe this is why my Chinese business friends told me not to target the Chinese market when I first arrived in 2007. Then again, it depends on the industry. But for internet and technology, it is a struggle for sure. Just trying to give readers some perspective of the internal struggle of the Chinese internet.

This Kind of News Affects Hong Kong Tech Companies?

Again, I am curious if people are aware Hong Kong internet companies do not need to filter their content. When Google China left, they came to Hong Kong. Did people noticed that in the news? I am so deep in this on a daily basis I just wonder how much awareness there is globally. Hong Kong is a pretty sweet safe haven of technology. Also Hong Kong is where Edward Snowden first went. The internet speeds in Hong Kong are some of the fastest in the world – while the internet speeds in China are some of the slowest. 9999

I just hope the majority of people out there know this. And I hope Hong Kong stays awesome like it is – super fast, unfiltered internet.

Are US Tech Companies Also at Risk of Losing Public Trust?

This blog, Global From Asia, is hosted on Hostgator in Texas, USA. Does the US government have access to the information on its servers? Is it already doing it? Should I move my hosting to Hong Kong? Am I being paranoid?

I always said, I don’t have anything to hide, so who cares if a government reads which websites I am surfing, my files on my computer, etc. I don’t think I am doing anything wrong by blogging here on Global From Asia (though I have had warnings from friends to watch what I say…).

Edward Snowden tells us to stop using Dropbox, Facebook, and everything Google. I like how he responds to those (like me) who say they have nothing to hide – he says that isn’t the point; the point is that it is YOUR data and your information and if anyone else needs to read it they should have to ask you first, government or not.

I always think that anything I put on the internet is public, there aren’t any secrets in the online world. I know a lot of people who think files and websites they surf and pictures they upload are private; I would seriously research that – because it isn’t.

While I don’t think a mass of people will rush away from Facebook (they are addicted, ha), awareness is the most important part.
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Maybe I have been in Asia too long. I have always been fascinated with the internet and international business. Seems governments are now catching up with the power of the internet and scrambling on best controlling it for the benefit of themselves (and their citizens?). I really think it breaks down to a few points:

  1. Where are you physically located – or are you totally online and it doesn’t matter? But if you are “fixed” to a location, will you have an office and full-time staff. If so, then you may need a physical presence with a company there.
  2. Where are your customers located? This is pretty important; they are the ones giving you money.
  3. Were do you want to host your website? As far as reaching your customers, the location of your server should be as close to them as possible so the site loads nice and fast.
  4. Where will you register your company? Will that government get involved with the data of you and your customers (or users).
  5. What is your branding and company image? Will you put your company address on your website? Do you think it matters to your users where you say you are located?

As a business, trust is almost always the most important. Customers and users need to trust that the information they give you is safe and secure. You should tell them your privacy policy. I wonder if there is a section in these privacy policies about government’s access to the information. If it’s not there now, I think it should be soon.

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